Obama’s Right – in a Perverse Way – about Government Playing an Important Role for Small Businesses

President Obama recently got himself in a bit of hot water with his “you didn’t build that” remark, which trivialized the hard work of entrepreneurs.

But he is right – in a perverse way – about government playing a big role in the life of small businesses. Thanks to a maze of regulations, the government is an unwelcome silent partner for every entrepreneur. And we’re not talking small numbers.

But sometimes an image helps to make things easy to understand. Here’s a chart from the Joint Economic Committee, which maps out the web of regulation imposed by Washington.

This chart does more than just show sources of red tape coming from Washington. It shows that “Washington” is really several entities, such as Congress, the executive branch, the courts, and so-called regulatory agencies.

These varies entities then impose regulatory burdens in various fields, such as labor, finance, tax, and environment.

Keep in mind, by the way, that each small pink circle actually represents an entire field of regulation. So when you see, for instance, the “Obamacare” circle, what you’re really seeing is this nightmarish image of regulatory complexity.

And don’t forget the role of state and local government.

Last but not least, remember that each regulatory bureaucracy is then capable of making individual decisions that…well, you judge for yourself.

Yes! And yet the only conversation about regulation that we can seem to have is regarding the financial sector. Which is just a product of our federal reserve system and crony capitalism at it’s “finest.”

Meanwhile small(er) business is drowning in red tape and B.S. that govt (and big business influence on govt) heaps on it. And so many wonder why our economy has stagnated.

The issue is not the red tape map in an absolute sense but in a relative one. The map is starting to resemble a lot like the corresponding map for European businesses, and thus American growth rates are resembling more and more European growth rates – a subpar 1-2% annual growth trendline gainst the backdrop of 5% global average growth.

More importantly, once down this road, like many times before the world over, the electorate will react to the regulatory failures by imposing more regulation. The writing is on the wall.